Crypto

Jim Cramer advises avoiding cryptocurrencies and sticking with gold for “real protection” against inflation and economic chaos.

He added that bitcoin is too volatile to be used as a currency. “Imagine that business owners are trying to make deals with Facebook or Google shares … this is ridiculous,” he said.

Jim Cramer prefers gold to cryptocurrencies

On Monday, CNBC’s Mad Money host Jim Cramer shared some tips for investing in gold and cryptocurrencies. Cramer is a former hedge fund manager and co-founder of Thestreet.com, a financial news and literacy website.

He believes that investors should stay away from cryptocurrencies despite the recent success of bitcoin. Citing charts interpreted by Carly Garner, senior commodities strategist and options broker at Decarley Trading, Cramer noted that investors “should ignore crypto proponents now that bitcoin is bouncing back.” He continued to advise:

If you seriously want to hedge against inflation or economic chaos, this is… [Garner] says you should stick to gold. And I agree.

Quoting Garner, the Mad Money host explained that the correlation between Bitcoin futures and the Nasdaq-100 is very high, as shown on their daily charts since March 2021. This indicates that bitcoin performs better as a risky asset than as a store. value or stable currency, Cramer said, adding:

Imagine business owners trying to make deals in Facebook or Google shares… that’s ridiculous, they’re too volatile. Bitcoin is no different.

Unlike Cramer, some people believe bitcoin is a better inflation hedge than gold, including venture capitalist Tim Draper and billionaire hedge fund manager Paul Tudor Jones.

Cramer also warned about “counterparty risk,” which is the possibility that the other party to a transaction or investment will default. “Of course, you can just hold bitcoins directly in a decentralized wallet – this will protect you from counterparty risk,” he says. “But if you ever want to use it for anything, the risk is back on the table. And as FTX customers have learned, this can be devastating.”

The owner of Mad Money used to invest in bitcoin, ether and non-fungible tokens (NFTs), but last year he sold all his crypto holdings. He recommended bitcoin along with gold. In March 2021, he said: “I have been saying for years that you should have gold…but gold let me down. Gold is subject to too many vicissitudes. It is prone to problems with mining. In many cases, it’s frankly prone to failure.”

He has also repeatedly warned the U.S. Securities and Exchange Commission (SEC) to hold a “roundup” of non-compliant crypto firms, advising investors to get out of crypto now. “I won’t touch cryptocurrencies in a million years,” he said. Cramer frequently quoted John Reed Stark, former head of Internet law enforcement at the Securities and Exchange Commission, as saying recently that “the regulatory offensive has only just begun.”

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